Directors' report on remuneration (PDF 174 KB) - Inchcape

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BUSINESS REVIEW GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION PART 1 – POLICY REPORT EXECUTIVE REMUNERATION POLICY The elements of the remuneration policy for Executive Directors for 2013 are set out below. There are no changes to the remuneration policy compared to 2012 apart from the pension plan. The Group formally closed the UK final salary pension plan to future accrual on 31 December 2012. The Executive Directors will be offered membership of the Group’s new pension arrangement (on the same basis as all other colleagues) from 1 January 2013 in line with auto-enrolment. Element Objective and link to strategy Operation and performance metrics Opportunity Base salary To pay competitive salary to attract, retain and motivate talent Salaries are reviewed annually and any increases typically take effect from 1 April of each year Reviews take account of: scope of the role experience of the individual pay levels at organisations of a similar size, complexity and type pay and conditions elsewhere in the Group From 1 April 2013 salaries will be £810,140 and £426,123 for the Group Chief Executive and Group Finance Director respectively. These represent increases of 2% for the Group Chief Executive and 4% for the Group Finance Director on 2012 salaries, compared to an average increase across the Group of 2.84% Annual bonus Motivate outstanding performance; specifically, reward sustainable growth in profits, i.e. growth that comes from the top line as well as from improving margins. The matrix is intended to provide a balanced focus between commercial and cash initiatives; Net Promoter Score (NPS) multiplier is applied to the outcome to reinforce our Customer 1st strategy and maintain exceptional levels of customer service Matrix structure rewarding growth in revenue and operating profit, heavily weighted towards delivery of profit growth Any annual bonus earned above 100% of salary is paid in shares which are automatically invested in the co-investment plan NPS that falls below target levels of performance reduces bonus earned by up to 20% 60% of salary payable for target performance 150% of salary maximum payable for achieving stretch performance against all measures Co-investment plan (CIP) Encourage executive share ownership Ensure balance between growth and returns Reward performance against EPS and ROCE targets; EPS growth is a good measure of profitable growth while ROCE supports our cash initiatives of controlling working capital and capital expenditure Offers Executive Directors a voluntary share investment opportunity in return for a performance based match Any bonus over 100% of salary will be paid in shares which will be automatically invested in the plan. Further voluntary investments may be made up to the investment limit Invested shares can be withdrawn at any time but the entitlement to a match would be lost if the invested shares are withdrawn before the end of the relevant three year vesting period Vesting of matching awards based 75% on three year EPS growth and 25% on three year average ROCE performance Executive Directors may invest up to an overall maximum of 50% of post-tax salary Maximum match of 2:1, threshold of 0.5:1 Maximum matching award is therefore 100% of salary in any year www.inchcape.com 51
Directors’ <strong>report</strong> on remuneration continued Element Objective and link to strategy Operation and performance metrics Opportunity Performance share plan (PSP) Save as you earn (SAYE) Provide a meaningful reward to senior executives linked to the long-term success of the business The mix of ‘normal’ and ‘enhanced’ performance shares enables the delivery of median pay for median performance; upper quartile pay for upper quartile performance; and upper decile pay for upper decile performance Ensure balance between growth and returns as above Strengthen alignment with shareholders by defining award sizes as a number of shares To encourage share ownership across the organisation Annual awards of ‘normal’ performance shares, vesting 75% on three year EPS growth, and 25% on three year average ROCE Annual awards of ‘enhanced’ performance shares, vesting on stretch EPS targets, over and above those attached to ‘normal’ performance shares Any dividends paid would accrue over the vesting period and would be paid only on those shares that vest The Committee can reduce or prevent vesting in the event of a material restatement of the Group Financial Statements or gross misconduct Participants make monthly savings, over a three year period. At the end of the savings period the funds are used to purchase shares under option As this is an all-employee scheme and Executive Directors participate on the same terms as other employees, the acquisition of shares is not subject to the satisfaction of a performance target Award levels are expressed as a number of shares, subject to an individual limit of 300% of salary However, the Committee will review award sizes prior to each grant to ensure that they are appropriate in light of market data and individual and Group performance Subject to this review, and the individual salary limit, for 2013 the Group Chief Executive will receive 304,170 normal awards and 101,390 enhanced awards, and the Group Finance Director will receive 130,760 normal awards and 26,150 enhanced awards Maximum savings of £250 per month Share ownership guidelines Pension Other benefits To encourage share ownership and ensure alignment of executive interests with those of shareholders To provide market competitive pension benefits where it is cost effective and tax efficient to do so To provide market competitive benefits where it is cost effective and tax efficient to do so Requirement to hold a fixed number of shares. Executives are required to make progress in achieving these targets with their personal, after tax, funds regardless of the extent to which long-term incentives vest, if at all The Group’s new pension scheme, Cash+, is a career average cash retirement scheme which accrues 16% of earnings (capped at £300,000 p.a.) paid as a lump sum at the age of 65. Members are required to contribute 7% of pensionable salary Includes: company cars medical care life assurance premiums Equivalent to 200% of base salary for Executive Directors Each Executive Director has five years from 2007, or date of appointment if later, to reach this shareholding target André Lacroix receives a cash supplement of 40% of his base salary and is eligible to join the Cash+ scheme John McConnell receives a supplement of 30% of base salary and is eligible to join the Cash+ scheme André Lacroix: £18,400 John McConnell: £6,200 All benefits are non-pensionable Non-Executive Directors fees To provide fair remuneration, reflecting the time commitment and responsibilities of the roles Non-Executive Directors receive a fixed fee and do not participate in any incentive schemes or receive any other benefits From 1 May 2013 the standard Non-Executive Director fee is £55,000 with an additional fee for a Chairmanship of a Committee of £10,000. The Deputy Chairman is paid a single fee of £76,000 and the Chairman a single fee of £300,000 52 Inchcape plc Annual Report and Accounts 2012
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Directors' report on remuneration (PDF 174 KB) - Inchcape

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